<PAGE> 1
As filed with the Securities and Exchange Commission on August 10, 1999
Registration No. 33-______
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-8
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
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TRIMEDYNE, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Nevada 36-3094439
- ------------------------------ -------------------
(State or Other Jurisdiction (IRS Employer
Incorporation or Organization) Identification No.)
2801 Barranca Road
P.O. Box 57001
Irvine, California 92619-7001
- ---------------------------------------- ----------
(Address of Principal Executive Offices) (Zip Code)
Trimedyne, Inc. 1997 Incentive And Non-Qualified Stock Option Plan
- --------------------------------------------------------------------------------
(Full Title of the Plan)
MARVIN P. LOEB, CHAIRMAN
TRIMEDYNE, INC.
2801 Barranca Road
Irvine, California 92619-7001
(Name and Address of Agent for Service)
(949)559-5300
(Telephone Number, Including Area Code, of Agent of Service)
Copies to:
RICHARD F. HOROWITZ, ESQ.
IRVING ROTHSTEIN, ESQ.
Heller, Horowitz & Feit, P.C.
292 Madison Avenue
New York, New York 10017
Calculation of Registration Fee
<TABLE>
<CAPTION>
===========================================================================================================
Proposed Proposed
Title of Maximum Maximum
Securities Amount Offering Aggregate Amount of
to be to be Price Offering Registration
Registered Registered Per Share (1) Price (1) Fee
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock 470,000 $2.0625 $969,375 $269.49
30,000 $ 1.25 $ 37,500 $ 10.43
===========================================================================================================
</TABLE>
(1) Estimated for the purpose for calculating the registration fee on the
basis of the closing price quoted on the Nasdaq National Market on August
4, 1999 or the respective date of actual grant issuance.
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<PAGE> 2
PROSPECTUS
TRIMEDYNE, INC.
407,500 SHARES OF COMMON STOCK, $0.01 PAR VALUE
This Prospectus covers the proposed offer and sale of up to 407,500
shares of Common Stock, $0.01 par value, of Trimedyne, Inc. at prevailing market
prices. The common stock will be sold by certain stockholders identified under
the section entitled "Selling Stockholders". The common stock will be issued
upon the exercise of options under our 1997 Incentive and Non-Qualified Stock
Option Plan by the selling shareholders. We will not receive any part of the
proceeds from the sale of any of these shares by the selling shareholders;
however, we will receive funds if the options are exercised.
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK. PLEASE READ
THE "RISK FACTORS" BEGINNING ON PAGE 3.
Our common stock is traded in the NASDAQ National Market System under
the symbol "TMED". On August 4, 1999 the closing price of the common stock, as
reported by Nasdaq, was $2.0625 per share.
The selling stockholders will pay all expenses with respect to the
offering of shares by them, except the costs associated with registering their
shares and preparing and printing this Prospectus.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Our principal offices are located at 2801 Barranca Road, Irvine,
California 92606. Our telephone number is (949) 559-5300.
THE DATE OF THIS PROSPECTUS IS AUGUST 10, 1999
<PAGE> 3
TABLE OF CONTENTS
PAGE
----
THE OFFERING 3
RISK FACTORS 3
USE OF PROCEEDS 4
SELLING STOCKHOLDERS 5
PLAN OF DISTRIBUTION 5
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE 6
COMMISSION'S POLICY ON INDEMNIFICATION FOR
SECURITIES ACT LIABILITIES 6
LEGAL OPINIONS 7
EXPERTS 7
2
<PAGE> 4
THE OFFERING
This prospectus covers the proposed offer and sale by certain security
holders of Trimedyne, Inc. from time to time at their discretion of up to
407,500 Shares of Common Stock, $0.01 par value, of the Company ("Common Stock")
at prevailing market prices. The Company's Common Stock is traded in the NASDAQ
National Market System (Symbol "TMED"). The closing price of the Company's
Common Stock on August 4, 1999 was $2.0625.
RISK FACTORS
An investment in the common stock offered in this Prospectus involves a
high degree of risk. You should carefully consider the following facts. The
risks and uncertainties described below may not be the only ones we face. If any
of the following risks actually occur, our business, financial condition or
results of operations could be materially adversely affected. In this event, the
trading price of our common stock could decline and you may lose all or part of
your investment.
WE HAVE INCURRED SUBSTANTIAL LOSSES AND ANTICIPATE CONTINUING LOSSES
We sustained losses of $2,538,000 in fiscal 1998 and $5,778,000 in
fiscal 1997. At March 31, 1999 we had an accumulated deficit of $30,122,000. We
anticipate continuing to incur losses until, at the earliest, we generate
sufficient revenues to offset the costs associated with the development of new
products. There can be no assurance that we will ever operate profitably. You
should be aware of the risks, problems, delays, expenses, and difficulties
encountered by companies developing new medical technologies, especially in view
of the significant competition that we have and will continue to encounter.
WE NEED SUBSTANTIAL ADDITIONAL FINANCING
The development, testing, approval, and commercialization of products
require a substantial amount of funds. We currently use our cash reserves to
meet our financial obligations and to fund operations. As of March 31, 1999, we
had $11,855,000 in working capital, of which $7,694,000 is cash and equivalents
and marketable securities. We believe existing working capital is sufficient to
meet our operating needs and the operating needs of our 90% owned subsidiary,
Cardiodyne, Inc. for the next twelve months. We have implemented cutbacks in
Cardiodyne's operating expenses and also have implemented cost reductions at
Trimedyne. We are seeking additional financing to continue development of
Cardiodyne's products and to support Trimedyne's operations. Sources of such
financing may include the sale of equity securities or the sale or licensing of
other patent rights. Any inability to obtain additional financing will have a
material adverse effect on us, such as requiring us to cease funding of
operations at Cardiodyne or curtail Trimedyne's operations. The issuance of
additional shares of common stock will dilute your holdings.
WE MAY NOT BE ABLE TO ADJUST TO RAPID TECHNOLOGICAL CHANGES
We are engaged in an intensely competitive industry. In recent years,
the surgical and medical laser industry has been characterized by rapid
technological change. There is no assurance that our present products may not
face technological obsolescence, or that we will be able to develop, acquire
licenses for, or obtain regulatory approvals to market new products and keep
pace with technological advances.
WE MAY ACQUIRE OTHER ENTITIES
We may engage in acquisitions of other companies and businesses and may
use our common stock as to pay for these companies. This may result in a
dilution of the percentage of the equity you own. In addition, such acquisitions
may involve speculative and risky undertakings. Under Nevada law, acquisitions
do not require shareholder approval, except when accomplished by merger or
consolidation.
THERE ARE OUTSTANDING OPTIONS THAT MAY DILUTE YOUR OWNERSHIP
As of June 30, 1999, our officers, directors, key employees and
consultants had been given stock options to purchase 1,372,284 shares of Common
Stock at an average exercise price of $1.08 to $2.25 per share. If these options
3
<PAGE> 5
are exercised, the underlying stock would represent approximately 11% of the
Company's outstanding stock. Substantially all of these options and warrants
have exercise prices below the current market price of the stock.
OUR STOCK PRICE IS VOLATILE
The market prices for securities of medical device companies, including
our stock, have been volatile. It is likely that the price of our common stock
will fluctuate in the future. Many factors can impact the market price of our
stock such as announcements of technological innovations or new commercial
products, announcements of preclinical testing and clinical trials results,
governmental regulation, patent or proprietary rights developments, changes in
earnings estimates and recommendations by securities analysts, and market
conditions in general. The market price of the stock could also be adversely
affected by future exercises of outstanding warrants and options.
WE DO NOT ANTICIPATE ISSUING STOCK DIVIDENDS
We have not paid any dividends in the past and do not anticipate paying
any dividends in the foreseeable future. This may depress the price of our stock
as it would not appeal to certain investors.
WE MAY ISSUE PREFERRED STOCK THAT COULD EFFECT THE RIGHTS OF HOLDERS OF OUR
COMMON STOCK
We are authorized to issue 1,000,000 shares of preferred stock. The
Board of Directors has broad powers to fix the rights and terms of any preferred
stock without requiring shareholder approval. The issuance of preferred stock
could have an adverse effect on the rights of holders of our common stock.
WE ARE SUBJECT TO EXTENSIVE GOVERNMENT REGULATION
Our business is subject to extensive regulation by the FDA and
comparable regulatory authorities of foreign countries. Compliance with
regulatory requirements and obtaining approvals to test or market new medical
devices is expensive and time consuming. We cannot be assured that we will be
able to meet all regulatory requirements or obtain and maintain approvals to
test and market new products. Failing to adhere to necessary government
requirements will have a negative impact on our ability to sell our products.
WE HAVE LIMITED LIABILITY INSURANCE
We have an aggregate of $6,000,000 of general liability insurance. There
is no assurance that we can maintain such insurance in force at an acceptable
cost or that the amount of such insurance will be sufficient to protect our
assets in the event of claims by users of our products or other parties.
WE ARE DEPENDANT UPON MAINTAINING VALID PATENTS AND LICENSES
There is no assurance our patents will be upheld if challenged in courts
or that we will be able to obtain additional valid patents. We also cannot
assure that our products do not infringe patents owned by others, licenses to
which may not be available to us. Our inability to do any of the foregoing will
have an adverse impact on our ability to successfully remain in business.
USE OF PROCEEDS
We will not receive any of the net proceeds from common stock sold by
the selling stockholders. However, we will receive the exercise price of the
underlying options when they are exercised. If all of the options are exercised,
we will receive approximately $593,000. No assurance can be given that any
options will be exercised or that we will receive any funds. Any funds that we
do receive will be added to working capital and used for general corporate
purposes.
4
<PAGE> 6
SELLING STOCKHOLDERS
An aggregate of up to 407,500 Shares of Common Stock is being offered
pursuant to this Prospectus by certain stockholders, including the persons whose
names appear below, who may be deemed to be affiliates of Trimedyne, as defined
in Rule 405 promulgated under the Securities Act of 1933, as amended. The table
below sets forth with respect to such selling stockholders, (i) the nature of
any position, office or other material relationship he has had with Trimedyne
within the past three years, (ii) the total amount of shares of common stock
beneficially owned by such stockholder prior to the offering, (iii) the amount
which may be offered for sale for the account of such stockholder, in his
discretion from time to time pursuant to this Prospectus, and (iv) the amount
and percentage of the outstanding common stock which would be beneficially owned
by such stockholder after sale of all of the securities offered by the selling
stockholders pursuant to this Prospectus, if they are offered and sold, and
assuming that other shares held by such parties are not sold.
<TABLE>
<CAPTION>
Shares Owned After
Offering
Names and Shares Owned Shares -------------------
Relationship Before Offering Offered Amount Percent
- ------------ --------------- ------- ------- -------
<S> <C> <C> <C> <C>
Marvin Loeb 991,000(1) 260,000 731,000 6.7%
Chairman
Chief Executive Officer
Shane Traveller 35,000 35,000(2) -- *
Chief Financial Officer
Dean Crawford 88,010 (2) 45,000 43,010 *
Chief Operating Officer
Richard Demmer 94,500 (2) 67,500 27,000 *
Secretary
</TABLE>
- --------------------------------------------------------------------------------
(1) Includes options to purchase 320,000 shares, 212,000 shares held by Mr.
Loeb and his wife, and 459,000 shares held by members of his family.
(2) Consists solely of stock options.
* Represents less than one percent.
PLAN OF DISTRIBUTION
The sale of the shares of common stock by the selling stockholders may
be effected by them from time to time in the Nasdaq National Market System or in
such other public forum where our shares are publicly traded or listed for
quotation. These sales may be made in negotiated transactions through the timing
of options on the shares, or through a combination of such methods of sale, at
fixed prices, which may be charged at market prices prevailing at the time of
sale, at prices related to such prevailing market prices or at negotiated
prices. The selling stockholders may effect such transactions by selling the
shares to or through broker-dealers, and such broker-dealers may receive
commissions from the selling stockholders and/or the purchasers of the shares
for which such broker-dealer may act as an agent or to whom they sell as
principal, or both. The compensation as to a particular broker-dealer may be in
excess of customary compensation.
The selling stockholders and any broker-dealers who act in connection
with the sale of the shares hereunder may be deemed to be underwriters within
the meaning of Section 2(11) of the Securities Act, and any commissions received
by them and any profit on any sale of the shares as principal might be deemed to
be underwriting discounts and commissions under the Securities Act.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by us with the Commission are incorporated
herein by reference:
(a) Annual Report on Form 10-K for the fiscal year ended September 30,
1998, filed pursuant to Section 13 of the Exchange Act.
(b) Quarterly Reports on Form 10-QSB for the quarters ended December 31,
1998, and March 31, 1999, filed pursuant to Section 13 of the
Exchange Act.
(c) The description of the common stock contained in the our
Registration Statement on Form 8-A filed July 16, 1982 pursuant to
Section 12 of the Exchange Act.
(d) All documents subsequently filed by the registrant pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act prior to the
filing of a post-effective amendment hereto which indicates that all
securities offered have been sold or deregisters all securities all
securities then remaining unsold.
In addition, all documents subsequently filed by us pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act prior to the filing of a
post-effective amendment hereto which indicates that all securities offered have
been sold or which deregisters all securities then remaining unsold, shall be
deemed to be a part hereof from the date of the filing of each such report or
document.
We will furnish to each person to whom this Prospectus is delivered,
upon written or oral request, a copy of any or all of the documents referred to
by reference. Requests should be addressed to: Shane Traveller, Trimedyne, Inc.,
2801 Barranca Road, Irvine, California 92606 (Telephone: (949) 559-5300).
The public may read and copy any materials we file with the Securities
and Exchange Commission at the SEC's Public Reference Room located at 450 Fifth
Street, NW, Room 1024, Washington, D.C. 20549. The public may obtain information
on the operation of the Public Reference Room by calling 1-(800)-SEC-0330. The
Commission maintains a World Wide Web site on the Internet at http://www.sec.gov
that contains reports, proxy and information statements and other information
regarding us and other registrants that file electronically with the Commission.
COMMISSION'S POLICY ON INDEMNIFICATION FOR
SECURITIES ACT LIABILITIES
Article 12 of the our Certificate of Incorporation directs us to provide
in our bylaws for provisions relating to the indemnification of directors and
officers to the full extent permitted by law. Section 78.751 of the Nevada
Revised Statutes, as amended, authorizes us to indemnify any director or officer
under certain prescribed circumstances and subject to certain limitations
against certain costs and expenses, including attorneys' fees actually and
reasonably incurred in connection with any action, suit, or proceeding, whether
civil, criminal, administrative or investigative, to which such person is a
party by reason of being a director or officer of Trimedyne or subsidiary of
Trimedyne if it is determined that such person acted in accordance with the
applicable standard of conduct set forth in such statutory provisions.
We may also purchase and maintain insurance for the benefit of any
director or officer which may cover claims for which we could not indemnify such
person.
Insofar as indemnification for liabilities arising under the Act may be
permitted to our directors, officers, and controlling persons pursuant to the
foregoing provisions, or otherwise, we have been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable.
6
<PAGE> 8
LEGAL OPINIONS
Legal matters in connection with the securities being offered hereby
have been passed upon for us by Heller, Horowitz & Feit, P.C. 292 Madison
Avenue, New York, New York 10017. Heller, Horowitz & Feit, P.C. is our general
securities and corporate counsel and represented us in our initial public
offering and in numerous matters since then. Mr. Richard F. Horowitz, a member
of such firm, is also a member of the our Board of Directors.
EXPERTS
The audited financial statements incorporated by reference in this
Prospectus and elsewhere in the Registration Statement have been audited by
McKennon, Wilson & Morgan, LLP, independent public accountants, as indicated in
their report dated December 9, 1998 and are included herein in reliance upon the
authority of said firm as experts in accounting and auditing in giving said
report.
7
<PAGE> 9
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference
The following documents filed by the Company with the commission are
incorporated herein by reference:
(a) The Company's Annual Report on Form 10-K for the fiscal year
ended September 30, 1998, and the Company's Quarterly Reports on
Form 10-Q(SB) for the fiscal quarters ended December 31, 1998 and
March 31, 1999 filed pursuant to Section 13 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act").
(b) The description of the Common Stock contained in the Company's
Registration Statement on Form 8-A filed July 16, 1982 pursuant
to Section 12 of the Exchange Act.
(c) All documents subsequently filed by the registrant pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act prior to
the filing of a post-effective amendment hereto which indicates
that all securities offered have been sold or deregisters all
securities all securities then remaining unsold.
Item 4. Description of Securities.
The Common Stock being offered hereby by the Company under the
Trimedyne, Inc. 1997 Incentive and Non-Qualified Stock Option Plan (the "Plan")
is fully described in the Company's Registration Statement on Form 8-A, filed on
July 16, 1982 pursuant to Section 12 of the Exchange Act (See "Incorporation of
Certain Documents by Reference").
Item 5. Interests of Named Experts and Counsel.
Mr. Richard F. Horowitz is a member of the firm of Heller, Horowitz &
Feit, P.C. which is general securities and corporate counsel to the Company and
is also a member of the Company's Board of Directors.
Item 6. Indemnification of Directors and Officers.
Article 12 of the Registrant's Certificate of Incorporation directs the
Registrant to provide in its bylaws for provisions relating to the
indemnification of directors and officers to the full extent permitted by law.
Section 78.751 of the Nevada Revised Statues, as amended, authorizes the
Registrant to indemnify and director or officer under certain prescribed
circumstances and subject to certain limitations against certain costs and
expenses, including attorneys' fees actually and reasonably incurred in
connection with any action, suit or proceeding, whether civil, criminal
administrative or investigative, to which such person is a party by reason of
being a director or officer of the Registrant if it is determined that such
person acted in accordance with the applicable standard of conduct set forth in
such statutory provisions.
The Registrant may also purchase and maintain insurance for the benefit
of any director or officer which may cover claims for which the Registrant could
not indemnify such person.
Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits
4.5 Trimedyne, Inc. 1997 Incentive and Non-Qualified Stock Option Plan
5.1 Opinion of Counsel
23.1 Consent of Counsel (included with Exhibit 5.1)
23.2 Consent of McKennon, Wilson & Morgan, LLP
S-1
<PAGE> 10
Item 9. Undertakings.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sells of securities
are being made, a post-effective amendment to this Registration Statement to:
(i) Include any Prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) Reflect in the Prospectus any facts or events which,
individually or together, represent a fundamental change in
the information in the Registration Statement;
(iii) Include any material additional or changed information on the
plan of distribution not previously disclosed in the
Registration Statement or any material change to such
information in the Registration Statement.
(2) For determining liability under the Securities Act, to treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial bona
fide offering.
(3) To file a post-effective amendment to remove any of the securities
that remain unsold at the end of the offering.
S-2
<PAGE> 11
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Irvine, State of California, on the 6th day of
August, 1999.
TRIMEDYNE, INC.
By: /s/ MARVIN P. LOEB
----------------------------------
Marvin P. Loeb
Chairman of the Board of Directors
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ MARVIN P. LOEB Chairman and Chief August 6, 1999
- ---------------------------------- Executive Officer
Marvin P. Loeb
/s/ DONALD BAKER Director August 6, 1999
- ----------------------------------
Donald Baker
/s/ BRUCE N. BARRON Director August 6, 1999
- ----------------------------------
Bruce N. Barron
/s/ RICHARD F. HOROWITZ Director August 6, 1999
- ----------------------------------
Richard F. Horowitz
/s/ SHANE H. TRAVELLER Treasurer and Chief August 6, 1999
- ---------------------------------- Financial Officer
Shane H. Traveller
</TABLE>
S-3
<PAGE> 12
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Description Page No.
- ------- ----------- --------
<S> <C> <C>
4.5 Trimedyne, Inc. 1997 Incentive and Non-Qualified
Stock Option Plan.............................................
5.1 Opinion and Consent of Counsel................................
23.2 Consent of McKennon, Wilson & Morgan, LLP.....................
</TABLE>
<PAGE> 1
Exhibit 4.5
TRIMEDYNE, INC.
1997 INCENTIVE AND NON-QUALIFIED STOCK OPTION PLAN
1. PURPOSE
This Incentive and Non-Qualified Stock Option Plan (the "Plan") is
intended to encourage stock ownership of Trimedyne, Inc., a Nevada Corporation
(the "Corporation") by officers, directors, consultants and employees of the
Corporation and any subsidiary corporations (the "Subsidiaries"), as defined in
Section 424(f) of the Internal Revenue Code of 1986, as amended (the "Code"), so
that they may acquire or increase their proprietary interest in the success of
the Corporation and Subsidiaries, and to encourage them to remain in the employ
of, or maintain their relationship with, the Corporation and/or the
Subsidiaries. It is further intended that options issued pursuant to this Plan
shall constitute either "incentive stock options" within the meaning of Section
422 of the Code ("Incentive Stock Options") or non-qualified stock options, the
tax consequences of which are governed by Section 83 of the Code ("Non-Qualified
Stock Options"), as designated at the time of grant. Any option granted pursuant
to this Plan which for any reason fails to qualify as an Incentive Stock Option
shall be deemed to have been granted as an option not qualified under Section
422 of the Code. The Corporation intends this Plan to enable it to issue
Non-Qualified Stock Options, with terms similar in most respects to Incentive
Stock Options. Non-Qualified Stock Options may be granted independently of
Incentive Stock Options.
2. ADMINISTRATION
The Plan shall be administered by a committee appointed by the Board of
Directors of the Corporation (the "Committee"). Each member on the Committee
shall by a "disinterested person" within the meaning of Rule 16b-3 as
promulgated under the Securities Exchange Act of 1934, as amended (the "1934
Act"). Such Committee shall consist of not less than two members of the
Corporation's Board of Directors. The Board of Directors may from time to time
remove members from, or add members to, the Committee. Vacancies on the
Committee, howsoever caused, shall be filled by the Board of Directors. The
Committee shall select one of its members as Chairman, and shall hold meetings
at such times and places as it may determine. A majority of the Committee at
which a quorum is present, or acts reduced to or approved in writing by a
majority of the members of the Committee, shall by the valid acts of the
Committee. The Committee shall from time to time at its discretion determine (i)
those officers, directors, consultants and employees (including key and non-key)
who shall be granted options; (ii) the number of shares of stock to be optioned
to each; and (iii) regardless of the express provisions of the Plan, the terms
of all options so granted. Other than "formula awards" granted pursuant to
Article 5(k), no director while a member of the Committee shall be eligible to
receive an option under the Plan.
The interpretation and construction by the Committee of any provisions
of the Plan or of any option granted under it shall be final unless otherwise
determined by the Board of Directors. No member of the Board of Directors or the
Committee shall be liable for any action or determination made in good faith
with respect to the Plan or any option granted under it.
If at any time no Committee shall be in office, the Board shall perform
the functions of the Committee provided that each member of the Board is a
"disinterested person."
3. ELIGIBILITY
The person who shall be eligible to receive Incentive Stock Options
shall be such officers and employees (whether or not they are directors) of the
Corporation or its Subsidiaries as the Committee shall select from time to time.
Non-employee directors, consultants and others, who have a relationship with the
Corporation or its Subsidiaries which the Committee considers beneficial to the
Corporation may only receive Non-Qualified Stock Options. Officers and employees
may also receive Non-Qualified Stock Options. An optionee may hold more than one
option, but only on the terms and subject to the restrictions hereafter set
forth. Members of the Committee, and members of the Board of Directors if there
is no Committee, shall only be eligible to receive grants under the Plan
pursuant to Article 5(k).
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<PAGE> 2
4. STOCK
The stock subject to the options to be granted hereunder shall be an
aggregate of 500,000 shares of the Corporation's authorized by unissued or
reacquired $.01 par value common stock, hereafter called "Common Stock." The
aggregate fair market value (determined at the time the option is granted) of
the Common Stock with respect to which Incentive Stock Options are exercisable
for the first time in any calendar year by an optionee under this Plan or any
other plan of the Corporation, a parent of the Corporation (if any) or
Subsidiaries, shall not exceed $100,000 (or such other amount as may then be
permissible under Section 422 of the Code). Any option granted and exercisable
in excess of such amount shall be treated as a Non-Qualified Stock Option with
respect to such excess. For the purpose of the immediately preceding sentence,
options that are not qualified as Incentive Stock Options by reason of such
excess shall be deemed to relate first to the most recently granted options. The
limitations established by each of the preceding sentences shall be subject to
adjustment as provided in Article 5(g) of the Plan.
In the event any outstanding option under the Plan for any reason
expires, lapses or is otherwise terminated, the shares of Common Stock allocable
to the unexercised portion of such option may again become the subject of an
option granted under the Plan.
5. TERMS AND CONDITIONS OF OPTIONS
Options granted pursuant to the Plan shall be authorized by the
Committee and shall by evidenced by agreements in such form as the Committee
shall from time to time approve, which agreements shall comply with and be
subject to the following terms and conditions.
(a) Number of Shares.
Each option shall state the total number of shares to which it
pertains.
(b) Option Price.
Each option shall state the option price, which, in the case of an
Incentive Stock Option, shall be not less than 100% of the fair market value of
the shares of Common Stock of the Corporation on the date of the granting of the
option. Notwithstanding the preceding sentence, in the case of an individual,
who immediately before the grant of an option, owns (including constructive
ownership pursuant to Section 424(d) of the Code) more than ten percent (10%) of
the total combined voting power of all classes of stock of the Corporation or
its parent (if any) or any of the Subsidiaries ("10% Stockholder"), the purchase
price per share of Common Stock under each such option shall not be less than
110% of the fair market value per share of stock at the time of the grant of the
option. At or prior to the time an option is granted, the Committee shall fix
the term of such option which, notwithstanding Section 5(d) of the Plan, shall
not be more than ten years from the date of the grant of the option in the case
of persons other than 10% Stockholders, and five years from the date of grant of
the option for 10% Stockholders. The foregoing restrictions shall not apply to
grantors of Non-Qualified Stock Options. In the event that the Committee takes
no action to fix the term of an option granted to such an individual, such
option shall contain a provision that it shall expire ten years from the date of
grant. For purposes of this paragraph, the parent of the Corporation shall be
any corporation, which with respect to the Corporation, is a parent corporation
pursuant to Section 424(e) of the Code; and the Subsidiaries of the Corporation
shall be all corporations which, with respect to the Corporation, are subsidiary
corporations pursuant to Section 424(f) of the Code. During such time as the
Common Stock is not listed upon an established stock exchange the fair market
value per share shall be the mean between the closing "bid" and "ask" prices of
the Common Stock in the New York over-the-counter market on the day the option
is granted, as reported by the National Association of Securities Dealers, Inc.
If the stock is listed upon an established stock exchange or exchanges, such
fair market value shall be deemed to be the highest closing price of the Common
Stock on such stock exchange or exchanges on the day the option is granted or if
no sale of the Corporation's Common Stock shall have been made on any stock
exchange that day, on the next preceding day on which there was a sale of such
stock. If there is no established market for the stock, the fair market value
shall be determined by the most recent prior private sale price of the Common
Stock. Subject to the foregoing the Committee in fixing the option price shall
have full authority and discretion so long as they shall act in good faith.
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(c) Medium and Time of Payment.
The option price shall be payable in United States dollars upon the
exercise of the option and may be paid in cash, check or in shares of Common
Stock of the Corporation, based upon the fair market value of those shares as
determined under Article 5(b) of the Plan.
(d) Term and Exercise of Options.
No Incentive Stock Option shall be exercisable either in whole or in
part prior to twelve months from the date it is granted. Subject to the right of
cumulation provided for in this subdivision, each option, other than Formula
Options, shall be exercisable as to not more than one-fifth of the total number
of shares granted thereby during each twelve-month period during which the
optionee remains continuously an employee or consultant of the Corporation,
commencing twelve months from the date of the granting of the option.
Notwithstanding the limitations of the first two sentences of this subparagraph,
the Committee, in its discretion, may waive such vesting requirements, and each
option shall also be otherwise exercisable pursuant to the terms of each option
agreement as determined by the Committee. To the extent that the option is not
exercised in any period, the number of shares as to which the option is
exercisable shall accumulate and be exercisable, in whole or in part, in any
subsequent period by not later than ten years (or five (5) years in the case of
a 10% Stockholder) from the date the option is granted. No option shall be
exercisable after the expiration of ten years (or five (5) years in the case of
a 10% Stockholder) from the date it is granted or three months after termination
of employment, except as provided for herein in the event of death or permanent
and total disability (as defined below) of the optionee. Upon exercise, the
option must be exercised for a minimum number of one hundred (100) shares,
unless the number of shares for which the option is exercisable at such time
shall be less than one hundred (100) shares in which case the minimum number of
shares exercisable shall be the total amount for which the option is
exercisable.
(e) Termination of Employment Except Death.
In the event that an optionee shall cease to be employed by the
Corporation or Subsidiaries for any reason other than his death and shall be no
longer in the employ of any of them, subject to the condition that no option
shall be exercisable after the expiration of ten years (or five (5) years in the
case of a 10% Stockholder) from the date it is granted, such optionee shall have
the right to exercise the option at any time within three months (twelve months
in the case of the "permanent and total disability" of the optionee as defined
in Section 22(e)(3) of the Code) after such termination of employment to the
extend his right to exercise such option had accrued pursuant to Article 5(d) of
the Plan and had not previously been exercised at the date of such termination.
Subject to Treasury Regulation 1.421-7, whether authorized leave of absence for
military or governmental services shall constitute termination of employment,
for the purpose of the Plan, shall be determined by the Committee, which
determination, unless overruled by the Board of Directors, shall be final and
conclusive. (As used in this Plan, the terms "employ" and "employment" shall be
deemed to refer to employment of the optionee by the Corporation and any of its
Subsidiaries and the continuation of such service and/or employment in none of
such capacities.)
(f) Death of Optionee and Transfer of Option.
During the lifetime of the optionee, the option shall be exercisable
only by him and shall not be assignable or transferable by him, and no other
person shall acquire any rights therein. Options granted hereunder shall not be
transferable except by will or by the laws of descent and distribution. In the
event of the death of an optionee, no option shall be exercised unless such
optionee had been an employee of the Corporation or any Subsidiary for a period
of six (6) months following the date of grant thereof. If the optionee shall die
while in the employ of the Corporation or a Subsidiary or within a period of
three months after the termination of his employment with the Corporation or any
Subsidiary and shall not have fully exercised the option, an option may be
exercised, subject to the condition that no option shall be exercisable after
the expiration of ten years from the date it is granted, to the extent that the
optionee's right to exercise such option had accrued pursuant to Article 5(d) of
the Plan at the time of his death and had not previously been exercised, at any
time within one year after the optionee's death, by the executors or
administrators of the optionee or by any person or persons who shall have
acquired the option directly from the optionee by bequest or inheritance.
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(g) Changes in Capitalization.
Subject to any required action be the stockholders, the number of
shares of Common Stock covered by each outstanding option, and the price per
share thereof set forth in each such option, shall be proportionately adjusted
for any increase or decrease in the number of issued shares of Common Stock of
the Corporation by reason of any Common Stock dividend or Common Stock split or
reverse stock split, recapitalization (including, without limitation, the
payment of an extraordinary cash dividend), the issuance of stock rights,
merger, consolidation, combination, exchange of shares, spin-off, distribution
of assets to stockholders, or other similar corporate change. In its discretion,
the Committee may also adjust the number of shares of Common Stock covered by
each outstanding option in the event of the sale or other disposition or
distribution by the corporation of all or a portion of its assets.
Subject to any required actions by the stockholders, if the Corporation
shall be the surviving corporation in any merger or consolidation, each
outstanding option shall pertain to and apply to the securities to which a
holder of the number of shares of Common Stock subject to the option would have
been entitled. A dissolution or liquidation of the Corporation or a merger or
consolidation in which the Corporation is not the surviving corporation, shall
cause each outstanding option to terminate, provided that each optionee shall,
in such event, have the right immediately prior to such dissolution or
liquidation, or merger or consolidation in which the Corporation is not the
surviving corporation, to exercise his option in whole or in part without regard
to the installment provisions of Article 5(d) of the Plan.
In the event of a change in the Common Stock of the Corporation as
currently constituted, which is limited to a change of all of its authorized
shares with par value into the same number of shares with a different par value
or without par value, the shares resulting from any such change shall be deemed
to be the Common Stock within the meaning of the Plan.
To the extent that the foregoing adjustments relate to stock or
securities of the Corporation, such adjustments shall by made by the Committee,
whose determination in that respect shall be final, binding and conclusive,
provided that each Incentive Stock Option granted pursuant to this Plan shall
not be adjusted in a manner that causes such option to fail to continue to
qualify as an Incentive Stock Option within the meaning of Section 422 of the
Code.
Except as hereinbefore expressly provided in this Article 5(g), the
optionee shall have no rights by reason of any subdivision or consolidation of
shares of stock of any class or the payment of any stock dividend or any other
increase or decrease in the number of shares of stock of any class or by reason
of any dissolution, liquidation, merger or consolidation or spin-off of assets
or stock of any class, or securities convertible into shares of stock of any
class, and no adjustment by reason thereof shall be made with respect to, the
number or price of shares of Common Stock subject to the option.
The grant of an option pursuant to the Plan shall not affect in any way
the right or power of the Corporation to make adjustments, reclassification,
reorganizations or changes of its capital of business structure or to merge or
to consolidate or to dissolve, liquidate or sell, or transfer all or any part of
its business or assets.
(h) Rights as Stockholder or Employee.
An optionee or a transferee of an option shall have no rights as a
stockholder with respect to any shares covered by his option until the date of
the issuance of a stock certificate to him for such shares. No adjustment shall
be made for dividends (ordinary or extraordinary, whether in cash, securities or
other property) or distribution or other rights for which the record date is
prior to the date such stock certificate is issued, except as provided in
Article 5(g) hereof. The Plan is not a contract of employment, and the terms of
employment of any optionee or the relationship of any non-employee consultant
with the Corporation shall not be affected in any way be the Plan shall not be
construed as conferring any legal rights upon any optionee for a continuation of
employment, nor shall it interfere with the right of the Corporation or any
Subsidiary to discharge any optionee and to treat him without regard to the
effect which such treatment might have upon him as an optionee.
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(i) Modification, Extension and Renewal of Options.
Subject to the terms and conditions and within the limitations of the
Plan, including but limited to Article 5(d), the Committee may modify, extend or
renew outstanding options granted under the Plan or accept the surrender of
outstanding options (to the extent not theretofore exercised) and authorize the
granting to the new options in substitution therefor (to the extent not
theretofore exercised). The Committee shall not, however, modify any outstanding
options so as to specify a lower price. Notwithstanding the foregoing, however,
no modification of an option shall, without the consent of the optionee, alter
or impair any rights or obligations under any option theretofore granted under
the Plan.
(j) Investment Purpose and Qualification of Shares.
Each option under the Plan shall be granted on the condition that the
purchases of stock thereunder shall be for investment purposes, and not with a
view to resale or distribution except that in the event the stock subject to
such option is registered under the Securities Act of 1933, as amended, or in
the event a resale of such stock without such registration would otherwise be
permissible, such condition shall be inoperative if in the opinion of counsel
for the Corporation such condition is not required under the Securities Act of
1933 or any other applicable law, regulation, or rule of any governmental
agency.
The Corporation shall seek such authority as may lawfully be required
to offer and sell the shares covered by an option in each jurisdiction in which
an optionee resides. However, nothing herein shall require the Corporation to
register under the Securities Act of 1933 either the Plan, options granted
thereunder or any securities issued or issuable pursuant to any option granted
under the Plan. If such authority is not obtained for any reason, the
Corporation shall not be obligated (and shall be relieved of any liability for
failure) to issue and sell any securities which may be exercisable pursuant to
any option granted hereunder until and unless such authority is obtained.
(k) Formula Awards to Committee Members.
Each director appointed to the Committee shall be granted Non-Qualified
Stock Options for 30,000 shares of Common Stock on the day such Committee member
is so appointed and thereafter further grants of Non-Qualified Stock Options for
30,000 shares of Common Stock on the third anniversary of the grant of such
Committee member's most recent prior grant under this Article 5(k); provided,
however, that the grant to newly appointed Committee members shall be reduced on
an option-for-option basis by the amount of any option grants accepted by such
appointee from the Company within the prior 24 month period (the "Formula
Options".) The Formula Options granted to such Committee member shall have an
exercise price per share equal to the fair market value of a share of Common
Stock on the date of grant. Each Formula Option granted under this Article 5(k)
shall become exercisable in three equal installments on each of the first three
anniversaries of the date of grant. Each portion of each Formula Option granted
under this Article 5(k) shall be exercisable for ten years after the date of
grant. Upon termination of a director's membership on the Board, other than due
to such director's death or "permanent and total disability," any Formula
Options which are then exercisable may be exercised by such director at any time
prior to the expiration of such option's term or within three (3) months (twelve
months in the case of death or "permanent and total disability") following such
cessation of membership, whichever period is shorter. The exercise price for
each Formula Option granted pursuant to this Article 5(k) is payable in the
forms prescribed in Article 5(c). The terms and provisions of the Plan,
including specifically but without limitation the first sentence of Article
5(g), shall also apply to the grant and exercise of Formula Options, to the
extent such other provisions do not contradict the express provisions of this
Article 5(k) and further provided that no provision of this Plan shall be
construed as applying to this Article 5(k) if the application of such provision
would have the effect of a recipient of Formula Options to not be a
"disinterested person."
(i) Other Provisions.
The option agreements authorized under the Plan shall from time to time
and from option to option contain such other provisions, including, without
limitation, restrictions upon the exercise of the option, as the Committee shall
deem advisable in each case. Any such option agreement shall contain such
limitations and restrictions upon the exercise of the option as shall by
necessary, in the case of Incentive Stock Options, in order that such option
will be an Incentive Stock Option or to conform to any change in law.
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6. CORPORATION LOANS
The Corporation may make nonrecourse, collateralized loans to employees
for the purpose of exercising options, with such loans to be made to employees
of the Corporation or the Subsidiaries who are then and who remain in good
standing, said loans bearing interest at a rate to be determined by the
Committee, but in no event at a rate of interest less than the Federal interest
rate applicable under Section 7872 of the Code. Such loans shall be in such
amounts as may from time to time be required to enable said employees to
exercise options granted under the Plan, to the extent that such loans are
permitted by law and to the extend that such options are then exercisable, and
shall be secured by the shares being purchased. Such loans shall, however,
terminate and be due and payable (including interest) thirty days after the last
day of the employment of any employee or, if earlier, upon the disposition by
the employee of the shares purchased with the proceeds of such loans.
7. RELOAD OPTIONS
Without in any way limiting the authority of the Committee to make
grants hereunder, and in order to induce officers and other key employees to
retain ownership of shares of stock in the Company, the Committee shall have the
authority (but not an obligation) to include within any option agreement a
provision entitling the optionee to a further option (a "Reload Option") in the
event the optionee exercises the option evidenced by the option agreement, in
whole or in part, by surrendering other shares of stock of the Company in
accordance with this Plan and terms and conditions of the option agreement. Any
such Reload Option shall be for number of shares of stock equal to the number of
surrendered shares of stock, shall become exercisable in the event the purchased
shares of stock are held for a minimum period of time established by the
Committee, and shall be subject to such other terms and conditions as the
Committee may determine. Reload options shall only be available to Committee
members exercising Formula Options received pursuant to Article 5(k), if the
Corporation shall receive an opinion of counsel that the grant of Reload Options
to such Committee member will not cause such Committee member to lose his status
as a "disinterested director" within the meaning of Rule 16b-3 promulgated under
the 1934 Act, in which event the Reload Options shall be held for six months
before they may be exercised.
8. TERM OF PLAN
Options may be granted pursuant to the Plan from time to time within a
period of ten years from the date the Plan is adopted, of the date the Plan is
approved by the stockholders, whichever is earlier.
9. INDEMNIFICATION OF COMMITTEE
In addition to such other rights of indemnification as they may have as
directors or as members of the Committee, the members of the Committee shall be
indemnified by the Corporation against the reasonable expenses, including
attorneys' fees, actually and necessarily incurred in connection with the
defense of any action, suit or proceeding, or in connection with any appeal
therein, to which they or any of them may be a party be reason of any action
taken or failure to act under or in connection with the Plan or any option
granted thereunder, and against all amounts paid by them in settlement thereof
(provided such settlement is approved by independent legal counsel selected by
the Corporation) or paid by them in satisfaction of a judgement in any such
action, suit or proceeding; provided that within 60 days after institution of
any such action, suit or proceeding a Committee member shall in writing offer
the Corporation the opportunity, at its own expense, to handle and defend the
same. The foregoing right of indemnification shall be exclusive and shall be
independent of any other rights of indemnification to which such persons may be
entitled under the Corporation's Articles of Incorporation or By-Laws, by
contract, as a matter of law, or otherwise.
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10. AMENDMENT OF THE PLAN
The Board of Directors of the Corporation may, insofar as permitted by
law, from time to time, with respect to any shares at the time not subject to
options, suspend or discontinue the Plan or revise or amend it in any respect
whatsoever except that, without approval of the stockholders, no such revision
or amendment shall change the number of shares subject to the Plan in a material
amount, change the designation of the class of employees eligible to receive
options, decrease the price at which options may be granted, remove the
administration of the Plan from the Committee, or render any member of the
Committee eligible to receive and option under the Plan, other than Formula
Options, while serving thereon. Furthermore, the Plan, as to Incentive Stock
Options, may not, without approval of the stockholders, be amended in any manner
that will cause such options issued under it to fail to meet the requirements of
Incentive Stock Options as defined in Section 422 of the Code, and further
provided that neither the Board of Directors nor the Committee may amend,
suspend, modify, or terminate the Plan so as to alter or impair any grantee's
right under any option theretofore granted under the Plan. The above
notwithstanding, the provisions of Article 5(k) shall not be amended more than
once every six months, other than to comport with changes in the Code, the
Employee Retirement Income Security Act of 1974, or the rules thereunder.
Further, any and/or all provisions of this Plan may be revised and/or deleted,
if the Board of Directors, acting upon the advice of Counsel, determines that
the securities laws and/or tax laws then in effect no longer require the
inclusion of such provisions.
11. APPLICATION OF FUNDS
The proceeds received by the Corporation from the sale of Common Stock
pursuant to options will be used for general corporate purposes.
12. NO OBLIGATION TO EXERCISE OPTION
The granting of an option shall impose no obligation upon the optionee
to exercise such option.
13. APPROVAL OF STOCKHOLDERS
This Plan is subject to approval by the holders of a majority of the
outstanding shares of Common Stock of the Corporation, which approval must occur
within the period beginning twelve months before or ending twelve months after
the date the Plan is adopted by the Board of Directors. In the period following
the adoption of this Plan by the Board of Directors but prior to obtaining
approval by the stockholders, the Committee may grant options hereunder, subject
to obtaining stockholder approval of the Plan.
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EXHIBIT 5.1
[HELLER, HOROWITZ & FEIT, P.C., LETTERHEAD]
Trimedyne, Inc.
2801 Barranca Road
Irvine, CA 92619
Gentlemen:
As counsel for your Company, we have examined your certificate of
incorporation, by-laws, and such other corporate records, documents and
proceedings and such questions of laws we have deemed relevant for the purpose
of this opinion.
We have also, as such counsel, examined the Registration Statement (the
"Registration Statement") of your Company on Form S-8, covering the registration
under the Securities Act of 1933, as amended, of up to 500,000 Shares of Common
Stock, $0.01 par value, of the Company ("Common Stock").
Our review has also included the exhibits and form of prospectus for
the issuance of such securities (the "Prospectus") filed with the Registration
Statement.
On the basis of such examination, we are of the opinion that:
1. The Company is a corporation duly authorized and validly existing
and in good standing under the laws of the State of Nevada, with
corporate power to conduct the business which it conducts as
described in the Registration Statement.
2. The Company has an authorized capitalization of 15,000,000 shares
of Common Stock and 1,000,000 shares of Preferred Stock.
3. The Common Stock has been duly and validly authorized and, upon
the issuance thereof, will be duly and validly issued as fully
paid and non-assessable shares of Common Stock.
We hereby consent to the use of our name in the Registration Statement
and Prospectus and we also consent to the filing of this opinion as an exhibit
thereto.
Very truly yours,
HELLER, HOROWITZ & FEIT, P.C.
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-8 of our report dated
December 9, 1998 appearing on page F-2 of the Trimedyne, Inc. Annual Report on
Form 10-K for the year ended September 30, 1998. We also consent to the
reference to us under the heading "Experts" in such Prospectus.
MCKENNON, WILSON & MORGAN, LLP.
Irvine, California
August 6, 1999
